Alan Taylor says higher energy prices would need to persist and fuel broader inflation before further increases are justified.
Bank of England policymaker Alan Taylor said further interest rate increases are not compelling without clearer evidence that elevated energy prices are causing persistent, broader inflation. He also said rates may need to fall if inflation pressures and energy risks ease.
The case for raising interest rates is “not compelling” unless energy prices remain high for an extended period and begin driving broader inflation, Bank of England Monetary Policy Committee member Alan Taylor said.
Speaking at the National Institute of Economic and Social Research, Taylor said the Bank should look for evidence that so-called second-round effects—such as higher wage demands and business price increases—are gaining traction.
His comments came after the MPC voted 6-3 to keep UK interest rates at 3.75% earlier this month. Taylor also said rates may eventually need to fall if inflationary pressures ease and energy risks abate.
